Many people are now living in a new normal. You may be one of them. I know I am. The Great Recession changed things for many of us. We were laid off from high-paying positions when our employers decided to hire newbies for half the pay rate. Or perhaps our small businesses failed. For others, life just happened: illness, deaths in the family, giving birth to children. Some of us finally decided to get out of soul-sucking careers that left us drained of vitality. For whatever reason, many people are living on lower incomes than in previous years and are finding it hard to make ends meet.
Fortunately there are techniques and tricks you can implement that can keep you in balance. Here are some of my favorite tips for embarking on a frugal life. I aim to provide tips that make a difference, but don't take an unreasonable amount of time or energy. Pick one or two at a time and wait until it is second nature before picking a couple more so you don't get overwhelmed.
Keep track of your real income level. Make a list of your monthly income as well as benefits such as annual bonuses, health insurance, life insurance, company discounts and vacation time. Don't forget “little” benefits such as meal vouchers or free services. Now make a list of all work related expenses: second car (as well as all commuting related expenses), work wardrobe, salon services, makeup, day care, lunches out, and taxes. Don't forget such expenses as: coffee on the way to work, alcohol consumed to unwind from work, or take out on days you feel too tired to work. What is your real income level? Many times work-related expenses (not including taxes) can eat up 1/3-1/2 your income.
Look for ways to minimize your work related expenses so you bring more home. Packing a lunch (at $2 per meal) rather than buying at a deli for $10 a meal can save you $40 a week, or over $2000 a year. Making coffee at home ($.25/cup) instead of buying on the way ($2/cup) saves $450 a year. A few of these changes can make a serious impact on your financial picture.
But what if the expenses eat up over half of your income? When I worked in banking, I made $17k a year, but had to spend a lot of money to look nice: suits, salon hair cuts on a regular basis, makeup, a different style of jewelry than I usually wear. These ate up a lot of my money, meaning that I was really making a lot less for my time. Switching careers meant that I didn't have to have a second wardrobe or ever step foot in a fancy salon. Also, for those in soul-sucking careers, if switching careers means that you have less need to drink, smoke or therapy-shop, you could possibly switch to a lower income but more enjoyable career.
Look at your home. Does it fit you? Are you a single living in a 4 bedroom? Do you have a large, fancy house, but spend most of your time out? Many times we buy houses (or rent apartments) to fit some idea of how we are supposed to live rather than how we really want to live. When this means paying higher rents or crushing mortgage payments, it can destroy your life.
If mortgage payments or rents are too high to meet on your new income, consider taking drastic steps. I will admit, this will be easier for renters than home-owners. If you are renting, just consider moving someplace cheaper when your lease is up. For owners, it is harder, but is still worth considering. Consider moving to a cheaper city/suburb/neighborhood. Consider selling your big house to buy a smaller (and cheaper) one. Consider renting out a sleeping room or storage space. If needed, switching early in the game can save you from receiving eviction or foreclosure threats in the mail.
Even if the big changes won't work for you, look for other ways to save around the home. Mow your own lawn instead of paying someone to do it ($20 a week for 6 months a year=$520), avoid running the air conditioner (when you're not home, or during cooler parts of the day, or any time other than when you are asleep), turn down the thermostat (bundle up in warm clothes, keep active or cuddle under a blanket to stay warm), learn to perform maintenance and basic repairs on your appliances and decorate using thrift shop artwork (or your kids artwork!), homemade crafts and simple but affordable furniture. If you ever move, remember than the bigger the house, the more you (typically) pay to buy it, insure it, decorate it, heat it, cool it, in taxes and fill it with stuff.
Cars are another big expense. For some reason, we tend to have our self worth all tied up in some idea of image. Luxury cars announce that we are successful and highly paid. Whether people are really impressed by fancy cars or not, I challenge this idea. A car gets you from point a to point b. Period. It is most beneficial financially to drive the cheapest car that doesn't require regular, large repairs. Buying a newer used car can be perfect. You don't suffer the huge depreciation that accompanies driving a new car off the lot, but unlike very old cars, you don't have to fix some major problem every month.
Ask your insurance carrier about any discounts: senior, student, married, safe driver, military, multi-plan. Avoid speeding for better gas mileage and no speeding tickets. Don't buy “ultra-special-premium” gasoline; standard will work just fine.
Better yet, abandon the car altogether or whenever possible. If you live in a city with a good public transit system, you can live easily and better without a car. You save on payments, insurance, tags, testing, parking, tickets, meters, and repairs. For much, much less you can buy a monthly pass for unlimited rides. (A car and expense easily cost well over $500 a month, but a monthly pass costs $75-100). Maybe you aren't ready for that step, but you can drive less. Consolidate trips instead of making multiple trips. Run errands on your bicycle or commute by bike or foot. If you decide to keep the car, but commute without it, let your insurer know and you can save $10 a month.
The grocery bill is a prime target for beginning frugality. There are many ways to save on groceries. Eat at home instead of restaurant/take out meals. Don't let food go to waste (The average family throws away 14% of the food purchased). Buy only what you know you will use before it goes bad. Use leftovers for work/school lunches.
You can save an easy 20-30% by simply shopping the sales. When an item on your regular list goes on a good sale, buy a few extra. Even better, you can plan your meals around whatever is on sale. If whole chickens are on sale, you'll have roasted chicken one day, chicken casserole the next, and make soup out of the carcass the next. Peruse the manager's special sections each time you shop; prices are usually 50-75% off.
If you have a scratch-n-dent grocery store nearby, you can save big. These stores buy items that are dented, discontinued, have old-style packaging or are nearing their sell-by date from larger grocery stores. They usually (although not always) sell them at great prices. At one such store, I bought 2-lb bags of lentils for $.19 and I regularly buy whole-grain pasta for $.59/lb.
Grow your own. If you have a yard that gets a little sunlight, you can grow a portion of your food. It is best to start with foods that your family enjoys eating, is costly to purchase, that grows well in your area, and that are of higher quality when fresh. If you plan to be in your home for a number of years, consider planting perennial plants: asparagus, rhubarb, strawberries, berry brambles or fruit trees. And renters, don't despair! You can grow herbs or mesclun mix in a sunny window sill or sprout beans seeds in a dark cupboard. Ask your landlord for permission to plant someplace out of the way, or plan a nice edible display for a flower bed. It can't hurt to ask; my previous landlord let me put in a lettuce bed that supplied an entire season's salads.
Whether you live in the city, a small town or in the woods, you can forage. This is great fun to do with friends or with children. Take a hike through the woods and look for edible mushrooms (best to take someone who knows what their talking about and avoid mushrooms that have any poisonous lookalikes in your area) and ostrich fern fronds. In my area, there are several parking lots that have mulberry trees planted along the sides. Dandelions are one of my favorite foods. I also make tea from red clover, mix crab apples into my home-made applesauce and enjoy pears that grow near my favorite coffee house. Foraging supplies a small percentage of my diet, but provides variety and entertainment.
There is no need to pay full price for clothing. Look over the clearance sections or shop during buy-one-get-one-free (BOGO) events. Plan ahead for needs so you can buy when you find a low price. One spring I found a pair of $100 winter boots for $20.
Shop at thrift stores or consignment shops for fantastic bargains ($3 jeans instead of $50) Always inquire about sales, promotions or loyalty programs. My favorite thrift store always has half off on certain color tags, and once a month everything is half off (for half off days, go early for the best selection, but be prepared for crowds and long lines). Another store has a text club. They send out texts about once a week to let you know of sales such as “half off all jeans from 4-8 on Friday”. They have a drawing each month; once I won $25 in gift certificates.
Shoes are hit and miss (lower-end thrift stores usually have worn shoes, and good mens shoes are very rare). I like buying used jeans because they are already worn in and more comfortable. Children's clothing selection is wonderful, since kids grow up faster than they can wear out clothing.
A great thing about used clothing is less risk of low-quality goods. When you buy new clothes, you don't know how it will survive that first wash. Especially when buying from cheaper fashion stores, you run a risk of having something fall apart within a few wears. If you buy something at a thrift store in good condition, it is likely to last for awhile longer.
Health-care is immorally expensive in America. Insurance is a huge weight on the middle class family, and for working or working poor families, it is impossibly expensive. Paying out of pocket for medical procedures is no longer possible. Whether you have insurance or not, with vigilance you can reduce your out of pocket health costs.
An ounce of prevention is worth a pound of cure. It is cheaper for you to stay healthy than to try to regain health once you are sick. Ask your parents and grandparents about health problems in the family. Research how to lower your risk of those issues. The basics are important for all of us: limit junk food, eat a varied diet of whole foods, maintain a healthy weight, exercise often, quit smoking,avoid meth. You know. The basics.
Brush your teeth three times a day and floss daily. Avoid drinking soda and energy drinks, smoking or eating candy. Excessive toothpaste use is cheaper than filling a cavity or getting dentures.
If you are uninsured, it helps to know that in an emergency, the ER cannot turn you away because of an inability to pay. So if you think you are having a heart attack, or your child breaks an arm, go. For less pressing issues, however, know that the ER will leave you with thousands of dollars of debt. Search online to see if any area hospitals are not-for-profit and will charge a pro-rated fee depending on income level.
Some cities provide free health care for children and pregnant/nursing women. Most larger cities and some smaller ones have free or income-based clinics. These are great resources. They are inconvenient, they do not provide the best care, but they help. Expect to take a day off of work and expect spend most of the day waiting. Many clinics have limits on who they will help (only certain races or income levels); others help anyone who walks in and require no proof of income. If a clinic says they cannot help you, ask for information about other clinics. If you cannot find a free clinic, look for providers who charge on a sliding scale. If you are low income, this can save you a large amount of money. If possible, tell the doctor that you are uninsured, but will pay cash and ask for a discount. The insurance companies never pay the full price, so the doctor may be willing to cut you a similar break.
If you have a severely limited income and have trouble eating a nutritious diet, taking a cheap multivitamin can be helpful to avoid deficiency. A multivitamin is not a replacement for a vitamin-rich diet, but can help. I don't know for sure whether herbal supplements work. I know that many supplements are based on plants that are edible and nutritious, but I doubt the effectiveness of taking a tiny pill stuffed with a bit of dried herb. I prefer to eat my nettles rather than take a nettles pill. Making your own herbal medicine from plants you grow or pick (responsibly!) in the wild is probably more effective and certainly more cost efficient that buying.
Do yourself a favor. Get a good night's rest. When you are chronically under-slept, you suffer. You lose your ability to handle stress, both emotional and physical. Your immunity lowers. You'll get sick easier and have a harder time kicking the bug. You'll feel depressed and probably gain weight. You'll have less energy for the things that matter to you.
Entertainment is usually one of the first expenses to be cut out when a family is trying to become frugal. While I admit that a lot of entertainment options are overpriced, I think that it is very important to avoid boredom.
There are many great ways to entertain yourself that are free or cheap. During the time when my family was at our lowest income level (during the 2008 economic meltdown), we found it very important to get out of the house and have fun to give us the strength and encouragement we needed to look for decent jobs during a time when any job was hard to come by.
The best free form of entertainment is to get out into nature. Nature makes us happy. Studies repeatedly show that we are happier if we exercise outside, get dirt on our fingers or are near plants. So get out there! Go for a walk or a bike ride. Swim at a free beach. Go hiking in a state park. Go mushroom hunting or berry picking. Do yoga in the back yard. Pick wildflowers. Plant a flower or vegetable garden. Watch a meteor shower. Go camping in a tent at a park or in the back yard. Go fishing (and then have a fish fry!). Dance in the rain.
Find fun and frugal things to do at home. Play board or card games. Knit. Crochet. Sew. Make jewelry out of random things that would otherwise be thrown away (broken jewelry, computer parts, buttons from old clothes). Read a book. Listen to music and dance. Bake cookies. Learn to preserve food (it is great fun, educational, frugal and it increases your self reliance).
If your city publishes a free paper, get it. Browse through it for frugal local activities. Most papers publish a list of free or cheap activities. One city's free daily listed three happenings each day. One was a exciting/once-in-a-lifetime event and was usually expensive. One was cheap such as a $5 concert or a buy-one-get-one-free day at a movie theater. The other was for a freebie; sometimes they were small like a free coffee at a coffee house if you brought a travel mug and sometimes they were big such as a free day at a museum. I'm subscribed to an e-newsletter for my city. Each week I get a Mega-Weekend email letting me know of everything that is going on. Usually I can find something affordable or free every day.
Go to the website of museums in your area. Most have free days at some point. Some are free one day a week, some have one day a year, and others are free every day. Museums are usually crowded on free days, but the savings make it worthwhile. Ask your library if they have passes you can check out. Google coupons or promo codes.
If you live in a large city, consider buying an Entertainment Book. These sell for $30, but get you $20k+ value in coupons (obviously you won't use them all, but will certainly save more than $30). Many coupons are buy-one-get-one-free for meals, museum entrance, or cultural events. Some are for freebies such as a free dessert at a restaurant with no purchase requirements. There are discounts for hotels and amusement parks. If you are planning a vacation, buy one for the city you'll be traveling to and use it to plan your activities.
Go to the library often. Check out books. Read magazines and newspapers. Use the Internet. Attend concerts, lectures, classes, movies, and children's book readings. Check out passes to museums. Sign up for adult and children's reading programs to earn freebies such as coupons to museums or sporting events and to be entered into drawings.
Go small and local to save money on cultural events. Rather than going to see a national band at $100 a ticket, go to see a local band at a free or cheap show. Drink prices are often lower at local shows compared to large concert venues. Go to a small theater to see a play written and performed by residents of the neighborhood rather than going to see national, traveling acts perform at the large, fancy theaters downtown.
Learn to be patient. If you have to see a movie the day it comes to theater, you will pay $10-15 a person for tickets. If you can wait until it hits a second-run theater, you will pay $1-4 a person. If you wait until it is at the rental shop, you can pay $3 for the whole family. If you reserve it at the library and wait patiently until it is your turn, it is free. If you have to buy a CD as soon as it comes out, you will pay $20-30. If you wait until it is at a used store, you will pay $5-10. If you wait until it is old and the online market is saturated, you can get it for $2.99 ($.01 plus $2.98 shipping on Amazon).